The Diem digital currency project has been in the works for the past two years. Developers intend to launch it before the end of the year.
Diem digital currency to launch in 2021
Facebook-backed Diem digital currency is expected to launch before the end of the year. The project was launched as the Libra project in 2019 by Facebook. It was later revolutionized to Diem to include more companies.
The project was initially designed as a universal currency tied to a basket of sovereign currencies such as the U.S. dollar and the Euro. However, the project was watered down after facing significant opposition from regulators globally. Facebook opted instead to launch multiple stablecoins backed by different fiat currencies.
According to CNBC, the Diem Association, the Swiss-based nonprofit entity in charge of developing the Diem digital currency, wants to launch it before the end of the year. Indeed, a source close to the matter told CNBC that the project would start with a single stablecoin pegged to the U.S. dollar in 2021.
The anonymous source said the pilot details are yet to be made public since they will be small in scale. The pilot will focus largely on transactions between individual consumers. It might also have an option that allows users to buy goods and pay for services. That said, the Diem Association has not yet set a date for the launch.
Diem project faced a lot of criticism
Facebook had faced a lot of criticism with the Diem project. The social media platform has nearly three billion users globally. Politicians and central banks are feeling unease about the prospect of launching a stablecoin that such a large number of people could use. The worry is that the currency could threaten monetary stability and potentially enable money laundering.
Not to mention, Facebook’s involvement also caused some concerns as the platform has been criticized for not adequately protecting user privacy. Michael Gronager, CEO of blockchain analysis firm Chainalysis, said, “I think it will get past the gates this year. It would be a missed opportunity if not. At the same time, it’s one of the multiple initiatives happening, and it’s similar to Tesla buying $1.5 billion in crypto. This is just part of a big movement, not a new movement.”